Compilation of the Social Security Laws

CIVIL MONETARY PENALTIES

Sec. 1128A. [42 U.S.C. 1320a–7a](a) Any person (including
an organization, agency, or other entity, but excluding a beneficiary,
as defined in subsection (i)(5)) that—

(1) knowingly presents
or causes to be presented to an officer, employee, or agent of the
United States, or of any department or agency thereof, or of any State
agency (as defined in subsection (i)(1)), a claim (as defined in subsection
(i)(2)) that the Secretary determines—

(A) is for a
medical or other item or service that the person knows or should know
was not provided as claimed, including any person who engages in a
pattern or practice of presenting or causing to be presented a claim
for an item or service that is based on a code that the person knows
or should know will result in a greater payment to the person than
the code the person knows or should know is applicable to the item
or service actually provided,

(B) is for a
medical or other item or service and the person knows or should know
the claim is false or fraudulent,

(C) is presented
for a physician’s service (or an item or service incident to
a physician’s service) by a person who knows or should know
that the individual who furnished (or supervised the furnishing of)
the service—

(ii) was licensed
as a physician, but such license had been obtained through a misrepresentation
of material fact (including cheating on an examination required for
licensing), or

(iii) represented
to the patient at the time the service was furnished that the physician
was certified in a medical specialty by a medical specialty board
when the individual was not so certified,

(D) is for a
medical or other item or service furnished during a period in which
the person was excluded from the Federal health care program (as defined
in section 1128B(f)) under which the claim was made pursuant to Federal
law.

(E) is for a
pattern of medical or other items or services that a person knows
or should know are not medically necessary;

(2) knowingly presents
or causes to be presented to any person a request for payment which
is in violation of the terms of (A) an assignment under section 1842(b)(3)(B)(ii), or (B) an agreement with a State agency (or other requirement of
a State plan under title XIX) not to charge a person for an item or
service in excess of the amount permitted to be charged, or (C) an
agreement to be a participating physician or supplier under section 1842(h)(1), or (D)
an agreement pursuant to section 1866(a)(1)(G);

(3) knowingly gives
or causes to be given to any person, with respect to coverage under
title XVIII of inpatient hospital services subject to the provisions
of section 1886, information that he knows or should know is false or misleading,
and that could reasonably be expected to influence the decision when
to discharge such person or another individual from the hospital;

(4) in the case of
a person who is not an organization, agency, or other entity, is excluded
from participating in a program under title XVIII or a State health
care program in accordance with this subsection or under section 1128 and who, at the
time of a violation of this subsection—

(A) retains
a direct or indirect ownership or control interest in an entity that
is participating in a program under title XVIII or a State health
care program, and who knows or should know of the action constituting
the basis for the exclusion; or

(B) is an officer
or managing employee (as defined in section 1126(b)) of such an entity;

(5) offers to or
transfers remuneration to any individual eligible for benefits under
title XVIII of this Act, or under a State health care program (as
defined in section 1128(h)) that such person knows or should know is likely to
influence such individual to order or receive from a particular provider,
practitioner, or supplier any item or service for which payment may
be made, in whole or in part, under title XVIII, or a State health
care program (as so defined);

(6) arranges or contracts
(by employment or otherwise) with an individual or entity that the
person knows or should know is excluded from participation in a Federal
health care program (as defined in section 1128B(f)), for the provision of items
or services for which payment may be made under such a program;

(7) commits an act
described in paragraph (1) or (2) of section 1128B(b)

(8) orders or prescribes a medical or
other item or service during a period in which the person was excluded
from a Federal health care program (as so defined), in the case where
the person knows or should know that a claim for such medical or other
item or service will be made under such a program;

(8) knowingly makes,
uses, or causes to be made or used, a false record or statement material
to a false or fraudulent claim for payment for items and services
furnished under a Federal health care program; or

(9) knowingly makes or causes to be
made any false statement, omission, or misrepresentation of a material
fact in any application, bid, or contract to participate or enroll
as a provider of services or a supplier under a Federal health care
program (as so defined), including Medicare Advantage organizations
under part C of title XVIII, prescription drug plan sponsors under
part D of title XVIII, medicaid managed care organizations under title
XIX, and entities that apply to participate as providers of services
or suppliers in such managed care organizations and such plans;

(9) fails to grant
timely access, upon reasonable request (as defined by the Secretary
in regulations), to the Inspector General of the Department of Health
and Human Services, for the purpose of audits, investigations, evaluations,
or other statutory functions of the Inspector General of the Department
of Health and Human Services;

shall be subject, in addition to any other penalties that may
be prescribed by law, to a civil money penalty of not more than $10,000
for each item or service (or, in cases under paragraph (3), $15,000
for each individual with respect to whom false or misleading information
was given; in cases under paragraph (4), $10,000 for each day the
prohibited relationship occurs; in cases under paragraph (7) $50,000
for each such act, in cases under paragraph (8), $50,000 for each
false record or statement, or in cases under paragraph (9), $15,000
for each day of the failure described in such paragraph). In addition,
such a person shall be subject to an assessment of not more than 3
times the amount claimed for each such item or service in lieu of
damages sustained by the United States or a State agency because of
such claim (or, in cases under paragraph (7), damages of not more
than 3 times the total amount of remuneration offered, paid, solicited,
or received, without regard to whether a portion of such remuneration
was offered, paid, solicited, or received for a lawful purpose). In
addition the Secretary may make a determination in the same proceeding
to exclude the person from participation in the Federal health care
programs (as defined in section 1128B(f)(1))and to direct the appropriate
State agency to exclude the person from participation in any State
health care program.

(b)(1) If a hospital
or a critical access hospital knowingly makes a payment, directly
or indirectly, to a physician as an inducement to reduce or limit
services provided with respect to individuals who—

(A) are entitled
to benefits under part A or part B of title XVIII or to medical assistance
under a State plan approved under title XIX, and

the hospital or a critical access hospital shall be subject,
in addition to any other penalties that may be prescribed by law,
to a civil money penalty of not more than $2,000 for each such individual
with respect to whom the payment is made.

(2) Any physician
who knowingly accepts receipt of a payment described in paragraph
(1) shall be subject, in addition to any other penalties that may
be prescribed by law, to a civil money penalty of not more than $2,000
for each individual described in such paragraph with respect to whom
the payment is made.

(3)(A) Any physician
who executes a document described in subparagraph (B) with respect
to an individual knowing that all of the requirements referred to
in such subparagraph are not met with respect to the individual shall
be subject to a civil monetary penalty of not more than the greater
of—

(ii) three times
the amount of the payments under title XVIII for home health services
which are made pursuant to such certification.

(B) A document
described in this subparagraph is any document that certifies, for
purposes of title XVIII, that an individual meets the requirements
of section 1814(a)(2)(C) or 1835(a)(2)(A) in the
case of home health services furnished to the individual.

(c)(1) The Secretary
may initiate a proceeding to determine whether to impose a civil money
penalty, assessment, or exclusion under subsection (a) or (b) only
as authorized by the Attorney General pursuant to procedures agreed
upon by them. The Secretary may not initiate an action under this
section with respect to any claim, request for payment, or other occurrence
described in this section later than six years after the date the
claim was presented, the request for payment was made, or the occurrence
took place. The Secretary may initiate an action under this section
by serving notice of the action in any manner authorized by Rule 4
of the Federal Rules of Civil Procedure[48].

(2) The Secretary
shall not make a determination adverse to any person under subsection
(a) or (b) until the person has been given written notice and an opportunity
for the determination to be made on the record after a hearing at
which the person is entitled to be represented by counsel, to present
witnesses, and to cross-examine witnesses against the person.

the person is estopped from denying the essential elements of
the criminal offense.

(4) The official
conducting a hearing under this section may sanction a person, including
any party or attorney, for failing to comply with an order or procedure,
failing to defend an action, or other misconduct as would interfere
with the speedy, orderly, or fair conduct of the hearing. Such sanction
shall reasonably relate to the severity and nature of the failure
or misconduct. Such sanction may include—

(A) in the case
of refusal to provide or permit discovery, drawing negative factual
inferences or treating such refusal as an admission by deeming the
matter, or certain facts, to be established,

(B) prohibiting
a party from introducing certain evidence or otherwise supporting
a particular claim or defense,

(e) Any person adversely
affected by a determination of the Secretary under this section may
obtain a review of such determination in the United States Court of
Appeals for the circuit in which the person resides, or in which the
claim was presented, by filing in such court (within sixty days following
the date the person is notified of the Secretary’s determination)
a written petition requesting that the determination be modified or
set aside. A copy of the petition shall be forthwith transmitted by
the clerk of the court to the Secretary, and thereupon the Secretary
shall file in the Court the record in the proceeding as provided in
section 2112 of title 28, United States Code[49]. Upon such filing,
the court shall have jurisdiction of the proceeding and of the question
determined therein, and shall have the power to make and enter upon
the pleadings, testimony, and proceedings set forth in such record
a decree affirming, modifying, remanding for further consideration,
or setting aside, in whole or in part, the determination of the Secretary
and enforcing the same to the extent that such order is affirmed or
modified. No objection that has not been urged before the Secretary
shall be considered by the court, unless the failure or neglect to
urge such objection shall be excused because of extraordinary circumstances.
The findings of the Secretary with respect to questions of fact, if
supported by substantial evidence on the record considered as a whole,
shall be conclusive. If any party shall apply to the court for leave
to adduce additional evidence and shall show to the satisfaction of
the court that such additional evidence is material and that there
were reasonable grounds for the failure to adduce such evidence in
the hearing before the Secretary, the court may order such additional
evidence to be taken before the Secretary and to be made a part of
the record. The Secretary may modify his findings as to the facts,
or make new findings, by reason of additional evidence so taken and
filed, and he shall file with the court such modified or new findings,
which findings with respect to questions of fact, if supported by
substantial evidence on the record considered as a whole, shall be
conclusive, and his recommendations, if any, for the modification
or setting aside of his original order. Upon the filing of the record
with it, the jurisdiction of the court shall be exclusive and its
judgment and decree shall be final, except that the same shall be
subject to review by the Supreme Court of the United States, as provided
in section 1254 of title 28, United States Code[50].

(f) Civil money penalties
and assessments imposed under this section may be compromised by the
Secretary and may be recovered in a civil action in the name of the
United States brought in United States district court for the district
where the claim was presented, or where the claimant resides, as determined
by the Secretary. Amounts recovered under this section shall be paid
to the Secretary and disposed of as follows:

(1)(A) In the case
of amounts recovered arising out of a claim under title XIX, there
shall be paid to the State agency an amount bearing the same proportion
to the total amount recovered as the State’s share of the amount
paid by the State agency for such claim bears to the total amount
paid for such claim.

(B) In the case
of amounts recovered arising out of a claim under an allotment to
a State under title V, there shall be paid to the State agency an
amount equal to three-sevenths of the amount recovered.

(2) Such portion
of the amounts recovered as is determined to have been paid out of
the trust funds under sections 1817 and 1841 shall be repaid to such
trust funds.

(3) With respect
to amounts recovered arising out of a claim under a Federal health
care program (as defined in section 1128B(f)), the portion of such amounts
as is determined to have been paid by the program shall be repaid
to the program, and the portion of such amounts attributable to the
amounts recovered under this section by reason of the amendments made
by the Health Insurance Portability and Accountability Act of 1996[51] (as estimated by the
Secretary) shall be deposited into the Federal Hospital Insurance
Trust Fund pursuant to section 1817(k)(2)(C).

(4) The remainder
of the amounts recovered shall be deposited as miscellaneous receipts
of the Treasury of the United States.

The amount of such penalty or assessment, when finally determined,
or the amount agreed upon in compromise, may be deducted from any
sum then or later owing by the United States or a State agency to
the person against whom the penalty or assessment has been assessed.

(g) A determination
by the Secretary to impose a penalty, assessment, or exclusion under
subsection (a) or (b) shall be final upon the expiration of the sixty-day
period referred to in subsection (e). Matters that were raised or
that could have been raised in a hearing before the Secretary or in
an appeal pursuant to subsection (e) may not be raised as a defense
to a civil action by the United States to collect a penalty, assessment,
or exclusion assessed under this section.

(h) Whenever the Secretary’s
determination to impose a penalty, assessment, or exclusion under
subsection (a) or (b) becomes final, he shall notify the appropriate
State or local medical or professional organization, the appropriate
State agency or agencies administering or supervising the administration
of State health care programs (as defined in section 1128(h)), and the
appropriate utilization and quality control peer review organization,
and the appropriate State or local licensing agency or organization
(including the agency specified in section 1864(a) and 1902(a)(33)) that such a penalty, assessment, or exclusion
has become final and the reasons therefor.

(1) The term “State agency” means the agency established or designated to
administer or supervise the administration of the State plan under
subtitle 1 of title XIX of this Act or designated to administer the
State’s program under title V or title XX of this Act.

(2) The term “claim” means an application for payments for items and services
under a Federal health care program (as defined in section 1128B(f)).

(3) The term “item or service” includes (A) any particular item, device,
medical supply, or service claimed to have been provided to a patient
and listed in an itemized claim for payment, and (B) in the case of
a claim based on costs, any entry in the cost report, books of account
or other documents supporting such claim.

(4) The term “agency of the United States” includes any contractor acting
as a fiscal intermediary, carrier, or fiscal agent or any other claims
processing agent for a Federal health care program (as so defined).

(5) The term “beneficiary” means an individual who is eligible to receive
items or services for which payment may be made under a Federal health
care program (as so defined) but does not include a provider, supplier,
or practitioner.

(6) The term “remuneration” includes the waiver of coinsurance and deductible
amounts (or any part thereof), and transfers of items or services
for free or for other than fair market value. The term “remuneration” does not include—

(I) waives
the coinsurance and deductible amounts after determining in good faith
that the individual is in financial need; or

(II) fails
to collect coinsurance or deductible amounts after making reasonable
collection efforts;

(B) subject
to subsection (n), any permissible practice described in any subparagraph
of section 1128B(b)(3) or in regulations issued by the Secretary;

(C) differentials
in coinsurance and deductible amounts as part of a benefit plan design
as long as the differentials have been disclosed in writing to all
beneficiaries, third party payers, and providers, to whom claims are
presented and as long as the differentials meet the standards as defined
in regulations promulgated by the Secretary not later than 180 days
after the date of the enactment of the Health Insurance Portability
and Accountability Act of 1996[52];

(D) incentives
given to individuals to promote the delivery of preventive case as
determined by the Secretary in regulations so promulgated;

(E) a reduction
in the copayment amount for covered OPD services under section 1833(t)(5)(B);
or

(F) any other
remuneration which promotes access to care and poses a low risk of
harm to patients and Federal health care programs (as defined in section 1128B(f) and designated by the Secretary
under regulations);

(G) the offer
or transfer of items or services for free or less than fair market
value by a person, if—

(i) the items or
services consist of coupons, rebates, or other rewards from a retailer;

(ii) the items
or services are offered or transferred on equal terms available to
the general public, regardless of health insurance status; and

(iii) the offer
or transfer of the items or services is not tied to the provision
of other items or services reimbursed in whole or in part by the program
under title XVIII or a State health care program (as defined in section 1128(h));

(H) the offer
or transfer of items or services for free or less than fair market
value by a person, if—

(i) the items or
services are not offered as part of any advertisement or solicitation;

(ii) the items
or services are not tied to the provision of other services reimbursed
in whole or in part by the program under title XVIII or a State health
care program (as so defined);

(iii) there is
a reasonable connection between the items or services and the medical
care of the individual; and

(iv) the person
provides the items or services after determining in good faith that
the individual is in financial need; or

(I) effective
on a date specified by the Secretary (but not earlier than January
1, 2011), the waiver by a PDP sponsor of a prescription drug plan
under part D of title XVIII or an MA organization offering an MA–PD
plan under part C of such title of any copayment for the first fill
of a covered part D drug (as defined in section 1860D–2(e)) that is a generic
drug for individuals enrolled in the prescription drug plan or MA–PD
plan, respectively.

(7) The term “should know” means that a person, with respect to information—

(A) acts in
deliberate ignorance of the truth or falsity of the information; or

(B) acts in
reckless disregard of the truth or falsity of the information,

and no proof of specific intent to defraud is required.

(j)(1) The provisions
of subsections (d) and (e) of section 205 shall apply with respect to this section
to the same extent as they are applicable with respect to title II.
The Secretary may delegate the authority granted by section 205(d) (as made applicable
to this section) to the Inspector General of the Department of Health
and Human Services for purposes of any investigation under this section.

(2) The Secretary
may delegate authority granted under this section and under section 1128 to the Inspector
General of the Department of Health and Human Services.

(k) Whenever the Secretary
has reason to believe that any person has engaged, is engaging, or
is about to engage in any activity which makes the person subject
to a civil monetary penalty under this section, the Secretary may
bring an action in an appropriate district court of the United States
(or, if applicable, a United States court of any territory) to enjoin
such activity, or to enjoin the person from concealing, removing,
encumbering, or disposing of assets which may be required in order
to pay a civil monetary penalty if any such penalty were to be imposed
or to seek other appropriate relief.

(l) A principal is
liable for penalties, assessments, and an exclusion under this section
for the actions of the principal’s agent acting within the scope
of the agency.

(m)(1) For purposes
of this section, with respect to a Federal health care program not
contained in this Act, references to the Secretary in this section
shall be deemed to be references to the Secretary or Administrator
of the department or agency with jurisdiction over such program and
references to the Inspector General of the Department of Health and
Human Services in this section shall be deemed to be references to
the Inspector General of the applicable department or agency.

(2)(A) The Secretary
and Administrator of the departments and agencies referred to in paragraph
(1) may include in any action pursuant to this section, claims within
the jurisdiction of other Federal departments or agencies as long
as the following conditions are satisfied:

(i) The case involves
primarily claims submitted to the Federal health care programs of
the department or agency initiating the action.

(ii) The Secretary
or Administrator of the department or agency initiating the action
gives notice and an opportunity to participate in the investigation
to the Inspector General of the department or agency with primary
jurisdiction over the Federal health care programs to which the claims
were submitted.

(B) If conditions
specified in subparagraph (A) are fulfilled, the Inspector General
of the department or agency initiating the action is authorized to
exercise all powers granted under the Inspector General Act of 1978
(5 U.S.C. App.) with respect to the claims submitted to the other
departments or agencies to the same manner and extent as provided
in that Act with respect to claims submitted to such departments or
agencies.

(n)(1) Subparagraph
(B) of subsection (i)(6) shall not apply to a practice described in
paragraph (2) unless—

(A) the Secretary,
through the Inspector General of the Department of Health and Human
Services, promulgates a rule authorizing such a practice as an exception
to remuneration; and

(B) the remuneration
is offered or transferred by a person under such rule during the 2-year
period beginning on the date the rule is first promulgated.

(2) A practice described
in this paragraph is a practice under which a health care provider
or facility pays, in whole or in part, premiums for medicare supplemental
policies for individuals entitled to benefits under part A of title
XVIII pursuant to section 226A.